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Target crushes estimates as retailer uses new shopper habits to gain market share

Target on Wednesday reported fiscal third-quarter earnings that easily outpaced analysts’ estimates as the discount retailer won market share by turning shoppers’ pandemic habits into lasting gains.

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Target on Wednesday reported fiscal third-quarter earnings that easily outpaced analysts’ estimates as the discount retailer won market share by turning shoppers’ pandemic habits into lasting gains.

The company said it grabbed market share across all of its core categories, from apparel to beauty. Year to date, it said it has won $6 billion in market share, with $1 billion in share gains coming during the latest quarter. It has measured the gains with third-party and internal research.

Buoyed by this strength, sales online and at stores open at least a year rose 20.7% during the third quarter. Comparable digital sales grew by 155%, while same-store store sales climbed 9.9%.

Target shares closed Wednesday up 2.34% to $166.85. Its stock has gained about 30% so far this year, bringing Target’s market value to $83.5 billion. Shares touched an all-time high of $172.12 earlier on Wednesday.

Despite the strong results, Target declined to provide an outlook. It withdrew its forecast during the first quarter as the coronavirus made predicting shopping habits more difficult.

Here’s how the company did in the fiscal third quarter ended Oct. 31:

  • Earnings per share: $2.79, adjusted vs. $1.60 expected by a consensus of analysts surveyed by Refinitiv
  • Revenue: $22.63 billion vs. $20.93 billion expected by Refinitiv
  • Same-store sales: up 20.7% vs. 11.2% expected by StreetAccount estimates

Target said its third-quarter net income rose to $1.01 billion, or $2.01 per share, from $714 million, or $1.39 per share, a year earlier. Excluding items, Target earned $2.79 per share, considerably more than the $1.60 per share expected by analysts.

Total revenue grew 21% to $22.63 billion from $18.67 billion last year, besting analysts’ expectations of $20.93 billion.

More frequent trips

While some retail rivals had to shutter in the early months of the pandemic, Target’s nearly 1,900 stores remained open as an essential retailer that could sell a wide range of goods, from gallons of milk to pajamas and laptops. In recent months, even as shopping mall competitors have opened again, Target said it has held on to customers and won more of their wallets.

Customers shopped more frequently with Target in the third quarter, and when they did, they put more in their baskets, the company said. Combined transactions in Target stores and on its website were up 4.5% year over year, while the average ticket grew 15.6% in the quarter.

Sales in all of Target’s merchandise categories were higher in the third quarter than a year earlier. Electronics shot up by more than 50%. Home items rose by a mid-20s percentage rate. Apparel increased by nearly 10%. And the two other categories, essentials & beauty and food & beverage, grew in the high teens.

Plans to grow beauty, apparel

Target is making long-term plays to pick up business from struggling department stores and hard-hit mall staples. The company announced last week that it will open smaller versions of Ulta Beauty shops inside of hundreds of its stores with a curated assortment of products, from hair care and perfume to lip gloss. More than 100 of the shops are expected to open next year.

CEO Brian Cornell said on a call with reporters that apparel has been a bright spot and Target is planning to lean into it. Along with loungewear, sleepwear and intimates, he said kids’ and men’s clothing performed well during the three-month period.

“Apparel has been one of our strengths, [and] certainly from a market share standpoint, one of the real highlights for our business throughout the quarter, and we certainly see that continuing as we finish up the year,” he said.

Target measures market share gains using its third-party and internal research. It wouldn’t be more specific about methodology.

The big-box retailer’s online options have remained popular. Its curbside pickup service, Drive Up, increased more than 500%. Target’s home delivery service Shipt grew nearly 280%. And Order Pickup, an in-store option that allows customers to retrieve online purchases in person, climbed more than 50%.

The pandemic, however, changed the rhythm of sales and the purchases that customers made, Cornell said. Since many schools and colleges began the year with remote learning, Target kept merchandise on the shelves and customers did back-to-school shopping later, he said. Those purchases drove cost growth in the mid-20% range in September, he said.

Many hours at home have translated to “outsized growth in electronics,” he said, such as purchases of computer software, video games, portable electronics and office equipment. And shoppers bought more than usual in the home category as they replaced decor and bought kitchen supplies.

Holiday buying began early

As the pandemic continues amid the holiday season, Target kicked off sales early and has tried to differentiate on safety and convenience. The company said last month it would devote twice as many parking spots to curbside pickup. It also added features to help shoppers during the typically busy time, such as a website tool they can use to check if there’s a line outside of their store and if so, reserve a spot ahead of their visit.

Cornell said customers have begun buying presents already, “but they still have a very long shopping list that they have to fulfill over the next few weeks.”

“We expect them to be decorating their homes,” he said. “We expect a lot of gift giving as many families will be shipping gifts across the country and be celebrating very differently than they had in the past.”

He added, “this is a holiday season when the guest is going to try to find that little bit of joy.”

Target shares closed Wednesday up 2.34% to $166.85. Its stock has gained about 30% so far this year, bringing Target’s market value to $83.5 billion. Shares touched an all-time high of $172.12 earlier on Wednesday.

Source: https://www.cnbc.com/2020/11/18/target-tgt-q3-2020-earnings.html

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Stitch Fix shares surge as online styling service reports surprise profit

Stitch Fix shares jumped after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

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The Stitch Fix application for download in the Apple App Store on a smartphone arranged in Hastings-on-Hudson, New York, U.S., on Saturday, June 5, 2021. Stitch Fix Inc. is scheduled to release earning on June 7.

Tiffany Hagler-Geard | Bloomberg | Getty Images

Stitch Fix shares jumped 14% in extended trading Tuesday after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Consumers have been splurging on new outfits in recent months, as many head back to school and return to social gatherings. Some have also citied the need for new clothes after either gaining or losing weight during the Covid pandemic.

Here’s how Stitch Fix did compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 19 cents vs. a loss of 13 cents expected
  • Revenue: $571.2 million vs. $548 million expected

Net income attributable to shareholders was $28 million, or 19 cents per share, in the latest period. A year ago, it posted a net loss of $44.5 million, or 44 cents a share. Analysts had been looking for the company to book a loss of 13 cents per share.

Revenue grew to $571.2 million from $443.4 million a year earlier. That was better than analysts’ expectations for $548 million.

Stitch Fix reported nearly 4.2 million active clients, up 18% from a year earlier. The company said net revenue per active client was $505, surpassing the $500 threshold for the first time ever. Customers have been purchasing more items to keep at home, Stitch Fix said, as they have more brands and price points to choose from.

Stitch Fix defines active clients as people who either ordered a “Fix” subscription or bought an item directly from its website in the preceding 52 weeks from the final day of the quarter.

The company also said it had its lowest ever churn rate at the end of the period, meaning its customers are sticking around.

Last month, Stitch Fix finally opened up its direct-buy option, which is now known as “Freestyle,” to the public. This allows people to shop Stitch Fix for individual items of clothing, without needing to sign up for a subscription.

CEO Elizabeth Spaulding said this should help Stitch Fix grow its addressable market in the year ahead. The company’s next initiative will be to market and raise broader awareness around the offering, she said. Stitch Fix is preparing to roll out a national advertising campaign on the debut.

Early indications are that “Freestyle” is meaningfully accretive to the company’s revenue per active client metric, Spaulding told analysts on a conference call.

“Clients have agency, flexibility and choice while also experiencing a highly personalized shopping experience,” Spaulding said.

For its fiscal first quarter, Stitch Fix said it sees sales in a range of $560 million to $575 million. That’s below analysts’ expectations for $588 million.

For the upcoming fiscal year, Stitch Fix anticipates sales rising 15% or more from the prior year. Analysts polled by Refinitiv had been looking for an 18% increase.

While the entire retail industry is working through supply chain complications, Stitch Fix said it is seeing a small impact, but nothing that will hurt the business in the fall and winter months. The company said it is less reliant on Vietnam, where manufacturing has largely come to a standstill due to ongoing pandemic lockdowns in the region.

As of Tuesday’s market close, Stitch Fix shares have fallen nearly 39% this year. The company has a market cap of $3.8 billion.

Find the full press release from Stitch Fix here.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Source: https://www.cnbc.com/2021/09/21/stitch-fix-sfix-q4-2021-earnings.html

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Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

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